Biotech shares retreated Tuesday for the second straight day as Democratic presidential candidate Hillary Clinton laid out a plan for reining in prescription drug prices.
Clinton, the front-runner for the Democratic presidential nomination, said she would cap patients’ copayments for expensive new medicines, eliminate tax breaks for consumer advertising, require drug makers to spend a minimum amount on research, and enable Medicare — the federal health insurance program for older Americans — to negotiate prices with biopharma companies.
Clinton, on the campaign trail in Little Rock, Ark., pledged to “deal with skyrocketing out-of-pocket costs and runaway prescription drug prices.”
Clinton’s proposals seek to capitalize on a growing backlash by consumers and health insurers against the surging prices being charged for new specialized therapies, which can cost tens or thousand or hundreds of thousands of dollars a year per patient. They are also tailored to appeal to left-leaning supporters of her Democratic rival, Vermont Senator Bernie Sanders.
Earlier this month, Sanders introduced a bill in Congress that would empower Medicare, the largest US health insurer, to bargain with drug companies and force the companies to disclose their research and manufacturing costs, profits, and how much they charge for medicines in other countries. The mandatory disclosures in Sanders’ plan mirror those being proposed in a Massachusetts bill that also includes a first-in-the-nation cap on some drug prices.
Clinton’s plan immediately drew fire from the drug industry.
“Secretary Clinton’s proposal would have a dramatic chilling effect on the pursuit and investment in breakthrough research with very little impact on the real goal — solving the scientific and medical challenges that patients face every day,” Massachusetts Biotechnology Council president Robert Coughlin said in a statement.
The benchmark Nasdaq Biotechnology index fell nearly 1.7 percent Tuesday after tumbling more than 5 percent on Monday when Clinton, a former secretary of state and New York senator, previewed her drug pricing assault by decrying “price gouging” on Twitter. She was responding to a fiftyfold increase by Turing Pharmaceuticals AG in the price of a 62-year-old drug.
Shares of some smaller Massachusetts biotechs had deeper drops Tuesday. Blueprint Medicines Corp. fell 14.78 percent to $25.13 on the Nasdaq, while Dicerna Pharmaceuticals Inc. declined 11.56 percent to $10.48, and Ocular Therapeutix Inc. lost 7.17 percent to $18.39.
Some health care investors dismissed Clinton’s plan as predictable politics, suggesting the proposed measures to control the prices of new medicines were unlikely to take effect.
“To me, the real question is will Hillary continue to elevate the general issue of drug pricing,” Mark Schoenebaum, biotech and pharmaceuticals analyst for research firm Evercore ISI in New York, wrote in a note to investors. “In other words, will she still be beating this drum loudly in, say, January? If so, it will inevitably put some pressure on the sector.”
Clinton has long been considered sympathetic to the life sciences industry, giving keynote addresses last year to the Biotechnology Industry Organization’s annual convention in San Diego and the Advanced Medical Technology Association’s annual convention in Chicago.
Nonetheless, both BIO and the Pharmaceutical Research and Manufacturers of America, a trade and lobbying group representing the drug industry, denounced the Clinton plan.
“Secretary Clinton’s proposal would turn back the clock on medical innovation and halt progress against the diseases that patients fear most,” a statement from the manufacturers group said.
Other industry players said the proposals being put forth by the presidential candidates were unrealistic, but they conceded that rising health care costs are unsustainable.
“It’s inevitable that the market is going to become more price sensitive,” said Paul Ashton, chief executive of Watertown biotech pSivida Corp., which makes drugs to treat retinal disease. “But I don’t know if government regulations are going to work because they tend to be clumsy. The current system will have to evolve in some way.”